NDOT change orders cost state $40 million

Change orders added $40 million to the cost of Department of Transportation road projects over a 30-month period.

The Executive Branch Audit Committee was told Wednesday tightening procedures and quality controls during design could save state up to $1.1 million a year.

Transportation Director Tom Stephens told the committee he is already working on making some of those changes. He said, in fact, he asked auditors to look into the number and cost of change orders to road projects.

But Stephens said most of the change orders are valid modifications or necessary expansions of the original designs of those projects. He referred to them as "value added" changes.

But Stephens admitted a change order rate of nearly 9 percent is too high and promised the committee he and his staff would work to reduce it to 8 percent this year, 7 next and 6 percent by 2004.

Auditors for the governor's Internal Audit Division examined 98 state road projects between Jan. 1, 1999, and June 30, 2001. They reported that the original contract total of $447 million for those projects increased to $487 million because of 731 change orders.

Stephens said he is looking in particular at areas such as Lake Tahoe, where environmental concerns and construction difficulties regularly force costly increases.

Auditors said some changes were caused when items were left out of original plans and specifications. They are also caused by unforeseen conditions during the project or items added after the project has gone to bid.

Other reasons include changes in the amount of materials needed and administrative adjustments including rising fuel costs and labor rates.

The auditors recommended having engineers visit project sites during the design of a project. They also recommended increased use of site surveys and evaluation during project design.

Auditors also called on the state to find ways of reducing the amount of staff time needed to prepare and process change orders.